Hercules lawsuit settled, but city may never get the full judgment

HERCULES -- Last week's $3.15 million settlement of a lawsuit against a former city manager and his former family company could end up yielding less than half its face value, court documents suggest.

The settlement, approved by the Hercules City Council last week and filed Tuesday in Alameda County Superior Court, calls for Nelson Oliva and NEO Consulting Inc. to pay the city $1.65 million and $1.5 million respectively. The total is close to the $3.2 million in city contracts with NEO that Oliva executed during his tenure as city manager, which ran from April 2007 to January 2011.

The suit accused Oliva of conflict of interest by holding a financial interest in NEO while executing contracts with the company in his capacity of city manager, among other allegations. The settlement does not include any admission of wrongdoing.

Oliva agreed to assign to the city $5,000 a month, or half his monthly disability pension, for 10 years up to a total of $600,000, starting August 2013. Oliva also is paying the city $64,000, the cash-out value of a CalPERS retirement account. He also gets a credit of $112,500 for the unpaid half of his 2011 exit pay and for which he had filed a counterclaim against the city.

Also part of the $1.65 million settlement amount is a $250,000 relocation loan the city granted Oliva early in his tenure and which matures in 2016.

The settlement exempts Oliva's family home in Apple Valley and his wife's salary as a schoolteacher, but it leaves open the possibility of seizing other assets or income yet unknown to make up the balance of his $1.65 million obligation.

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NEO's $1.5 million obligation is backed by real estate in Los Angeles County belonging to the company, now owned by its former general manager, Walter McKinney. But according to a November 2011 declaration by McKinney that is part of the court record, the NEO-owned real estate consists of a 2.5-acre chunk of desert land in Antelope Valley "valued at less than $10,000."

As long as McKinney abides by the terms of his part of the settlement, which consists mostly in listing the property for sale, the city agreed not to go after his personal property.

Councilman Bill Kelly, who is an attorney and former San Francisco police officer, said the settlement is a good thing for Hercules even if it ends up with little more than the roughly $80,000 collected to date.

"I'd like to see us get back every penny we're owed," Kelly said Monday. "The fact is, we got our pound of flesh, based on what's available today. Going forward, we've got a judgment, which allows us to go after other assets if any are found. And another important thing: We've stopped spending money on lawyers."